On Thursday, Goldman Sachs reaffirmed its Conviction Buy rating on ConAgra stock (NYSE:CAG), maintaining a $36.00 price target. The firm's stance remains positive despite ConAgra's shares falling approximately 8% after the company reported first-quarter results that did not meet expectations.
This decline contrasted with the S&P 500, which remained steady. The analyst noted that the underperformance was partly due to a temporary manufacturing issue with ConAgra's Hebrew National brand, which has since been resolved.
ConAgra's earnings are still on track according to the firm's fiscal year 2025 plan, with the company reiterating its guidance. Improvements in volumes and market share gains were highlighted as positive indicators for the company's performance. While the recent quarter's results have raised concerns among investors about the significant sequential progress needed to meet the full-year guidance, Goldman Sachs remains optimistic about ConAgra's prospects.
The analyst pointed to the sequential volume improvement and the company's portfolio, which is expected to continue appealing to consumers with a focus on convenience and healthier options. The valuation of ConAgra was also emphasized as attractive, with a next twelve months (NTM) price-to-earnings (P/E) ratio of 11.2x, which is lower than its 3-year and 5-year averages of 12.5x and 13.0x, respectively.
In conclusion, Goldman Sachs reiterated its Buy rating on the ConAgra stock, with a 12-month price target of $36, based on the company's ongoing volume growth, consumer-oriented portfolio, and current valuation.
In other recent news, ConAgra Brands Inc. reported a first-quarter sales decrease of 3.8% to $2.79 billion, a larger dip than the 2.1% decline anticipated by market experts. This trend reflects a shift in consumer behavior towards more affordable alternatives. In the midst of these challenges, ConAgra has been making strategic moves, including the acquisition of Sweetwood Smoke & Co., adding FATTY Smoked Meat Sticks to its product portfolio.
Additionally, the company has been the subject of various analyst predictions. Evercore ISI maintained its In Line rating on ConAgra shares, awaiting clearer evidence of sustained and healthy growth in both revenue and earnings. Meanwhile, Jefferies also held a cautionary stance, maintaining a Hold rating but increasing the share target to $30 from $27. Citi also raised its price target from $30 to $33, maintaining a neutral rating.
At the company's Annual Meeting, shareholders approved an amendment for officer exculpation and elected eleven nominees to serve as directors, though the named executive officer compensation was not approved. ConAgra anticipates fiscal year 2025 to be transitional, projecting a range of -1.5% to flat growth for organic net sales and an adjusted EPS of $2.60 to $2.65. These recent developments offer a glimpse into the company's ongoing efforts to navigate a challenging market environment.
InvestingPro Insights
To complement Goldman Sachs' analysis, InvestingPro data provides additional context for ConAgra's financial position. The company's market capitalization stands at $14.41 billion, with a current P/E ratio of 32.06. However, the forward-looking P/E ratio (adjusted) for the last twelve months as of Q1 2025 is projected to be 11.23, aligning closely with Goldman Sachs' NTM P/E estimate of 11.2x.
InvestingPro Tips highlight ConAgra's strong dividend history, having maintained dividend payments for 49 consecutive years and raised them for the past 5 years. This consistency in shareholder returns is further supported by the current dividend yield of 4.65%, which may appeal to income-focused investors.
Despite recent challenges, InvestingPro Tips indicate that net income is expected to grow this year, and analysts predict the company will remain profitable. This aligns with Goldman Sachs' optimistic outlook on ConAgra's future performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide deeper insights into ConAgra's financial health and market position.
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